Find the first year's depreciation, using the double-declining-balance method. Round to the nearest dollar.
-Cost: $54,000
Est. life: 20 years
Est. scrap: $5,000

Question

Quizplus · Accepted Answer

The double-declining-balance method of depreciation involves doubling the straight-line rate of depreciation. For an asset with a 20-year life, the straight-line depreciation rate is 1/20 or 5% per year. Doubling this rate gives 10% per year. The depreciation for the first year is calculated on the initial cost of $54,000. Therefore, the first year's depreciation is 10% of $54,000, which equals $5,400.

Find the First Year's Depreciation, Using the Double-Declining-Balance Method